Gov. Linda Lingle's administration is predicting that the recent lowering of the state's projected growth in tax revenues to 1 percent will mean that by fiscal year 2011, Hawaii will have a $903 million deficit, if nothing is done.

To prevent that, Lingle is instituting a series of budget freezes and suggesting that some of the state's construction budget be refinanced.

Lawmakers, however, say it will not be enough and that more drastic cuts are needed.

"I believe it is a crisis ... I believe people were hoping that it wouldn't get to this point, but it hit us a lot sooner than people thought," Senate President Colleen Hanabusa said yesterday.

Hanabusa, who attended a closed-door briefing by state Budget Director Georgina Kawamura last week, said the administration is not figuring in pay raises for public employees next year when the existing contracts expire.

Sen. Robert Bunda, a former Senate president, said the financial situation is so bleak, the state has only three alternatives.

"You either cut warm bodies (or) you cut programs, and you stall and stall on collective bargaining," Bunda said. "Definitely, collective bargaining will be on the table."

Hanabusa said she doubted that Lingle would propose a budget that included layoffs or reductions in force.

Randy Perreira, executive director of the Hawaii Government Employees Association, the state's largest public worker union, says he has not talked to the administration about either layoffs or delays in collective-bargaining talks.

"Obviously the picture is not good and not desirable," he said.

Layoffs, Perreira said, are "troubling and something we would want to avoid at all costs."

Hanabusa said after the budget briefing that she was not confident Lingle will be able to cut enough from her last two-year budget to forestall a deficit.

Instead, she said, it is likely that the Legislature will have to cut even more from the budget.

"We have had discussions with them, if they do cuts of 4 or even 8 percent or 10 percent, I don't think it will be enough to make up the deficit," Hanabusa said.

"If you look at the history, it has been the Legislature that has done the cutting," she added.

Asked about the political fallout if neither the governor nor the Legislature funds pay raises next year, Hanabusa said there is likely "to be some ramifications."